The company announced the acquisition Thursday morning and said it expected to pay about $700 million dollars for the peanut butter maker.

Jeff Ettinger, the board chairman and CEO of Hormel, says Skippy is the leading brand of natural peanut butter, representing 25 percent of domestic sales.

"We're a good blocking, tackling type of company. We know how to handle iconic brands, as we've shown with by our ability to continue to grow Spam. Here's another iconic American brand that was also started in the 1930's that also has tremendous name recognition. Secondly, I think when we turn our innovation skills loose on this brand, I think we're going to find ways to take the project out of the jar and to make the Skippy name usable on other types of products," he said.

"The franchise also includes an interesting and faster growing international component including significant volume in Canada and the number one market share in China," he added.

Company officials said they plan to pay for the deal mostly with cash on hand, and a small amount of borrowing.